Ex-Premier Opposing Cabinet Wins Czech Presidential Vote

By Peter Laca -
Jan 27, 2013

Former Prime Minister Milos Zeman
was elected president of the Czech Republic in the country’s
first direct vote following a campaign slamming the government’s
austerity measures in the midst of a recession.

Zeman got 54.8 percent of votes after two days of balloting
in a runoff that ended yesterday, the Prague-based Czech
Statistics Office said. He defeated Karel Schwarzenberg, the
millionaire prince and foreign minister, who promoted closer
ties with the European Union following a decade under Vaclav
Klaus, a critic of the bloc and the euro.

As the eastern EU member of 10.5 million struggles to exit
its second recession since 2009, government deficit cuts were
the focus of the presidential race. Zeman derided his opponent
for backing increases in sales taxes, an overhaul of the pension
system and lack of state investments.

“A directly elected president is something like a voice of
the citizens, making the mandate stronger to criticize a
government that is very unpopular,” the 68-year-old said in an
interview late yesterday on public Czech Television.

Zeman becomes the ex-communist EU member’s third president
since it became an independent state 20 years ago. Klaus, an
economist who as premier oversaw the transition from a
centrally-planned to market economy two decades ago, beat out
Zeman among others to replace the late Vaclav Havel in 2003. He
was forbidden by law to seek the post again.

Austerity Measures

The government credits its austerity measures with helping
to cut borrowing costs. Yields on five-year koruna notes fell
172 basis points, or 1.72 percentage points, in 2012, touching a
record-low 0.66 percent on Dec. 27. The five-year rate stood at
0.87 percent on Jan. 25, according to generic rates compiled by
Bloomberg.

Zeman’s presidency is a natural phenomenon as, together
with Havel and Klaus, he is one of the three “strongest
personalities” in Czech politics since the fall of communism in
1989, Premier Petr Necas told reporters after the voting
stations closed yesterday.

While he said he hopes the two can have “standard
cooperation,” Zeman sent a different signal, noting the
government was being propped up by lawmakers who defected from
parties that had left the ruling coalition.

Early Elections

“This isn’t a government that was elected in free
elections,” Zeman said. “If the government is held up by a
party that wasn’t elected, it would be appropriate to hold early
elections.”

The president, who until now had been elected by lawmakers,
picks the leader to form a Cabinet after elections. That’s often
a key role in a country where balloting frequently fails to
produce a majority. The head of state also influences monetary
policy by holding the sole right to name central bank board
members.

Necas’s three-party coalition lost parliamentary majority
last year following clashes over personnel and budget issues.
The government is ruling with support of unaffiliated lawmakers
who have helped it push through a series of austerity measures
and survive no-confidence motions.

Parliament’s Call

The government is accountable to parliament and that’s the
only institution empowered to call early elections, Miroslav
Kalousek, the finance minister and a member of Schwarzenberg’s
TOP09 party, said today.

“It isn’t a decision for Milos Zeman to make,” Kalousek
said in a television debate.

Zeman and Klaus were rivals in the 1990s, heading the two
largest political parties. Zeman, an economist who worked as a
forecaster in the academy of science after the fall of
communism, won the premier’s office in 1998 when his Social
Democrats formed a minority government that ruled in an
agreement with the opposition Civic Democrats, then led by
Klaus.

The presidential election came as a recession and
corruption fuel support for the Communist party, the political
heirs of Havel’s jailers, who endorsed Zeman.

Klaus’ Endorsement

Klaus endorsed Zeman before the run-off vote by saying his
successor should be a person who spent his life in the Czech
Republic, a swipe at Schwarzenberg whose aristocratic family was
forced to flee the then Czechoslovakia after the communists took
power in 1948.

Unlike Klaus, who refused to fly the EU flag above his
Prague castle seat, Zeman envisages the transition of the EU
into a federation with common foreign and defense policies, and
supports the future adoption of the euro.

His economic program for the presidential race included
calls for more state investment and restoring progressive
taxation for higher earners. Zeman has opposed the government’s
pension overhaul, a program designed to boost private retirement
savings that was among reasons cited by Standard & Poor’s when
it lifted the rating on the country’s debt two steps to AA-, its
fourth-highest investment grade, in 2011.

The president-elect said he would name central bankers who
support economic growth and not strive only to meet the
inflation and currency-stability goals mandated by law. Zeman
may consider appointing a trade union representative as a policy
maker, he said in one of the election debates.